E-Commerce and the Law

E-Commerce and the Law

Currently, there are not any consumer protection laws focused specifically on ecommerce. Online shopping is covered by the same consumer protection laws that cover tradition brick and mortar stores.

There are two classifications of B2C E-Commerce. They are as follows:

1. Direct Sellers
These are companies that provide products or services directly to customers are called direct sellers. These types of B2C companies are the most well-known. There are two types of direct sellers: e-tailers and manufacturers. An example of an e-tailer would be Amazon.com.

2. Online Intermediaries
Online intermediaries are companies that facilitate transactions between buyers and sellers and receive a percentage of the transaction’s value. These firms make up the largest group of B2C companies today. There are two types of online intermediaries: brokers and infomediaries. Examples would be eBay and eTrade.

This blog entry will focus on e-tailers and the consumer protection laws associated with shopping online.

First, let’s define consumer protection laws. Consumer protection laws are:

Consumer protection law or consumer law is considered an area of public law that regulates private law relationships between individual consumers and the businesses that sell them goods and services. Consumer protection covers a wide range of topics including but not necessarily limited to product liability, privacy rights, unfair business practices, fraud, misrepresentation, and other consumer/business interactions.
Such laws deal with bankruptcy, credit repair, debt repair, product safety, service contracts, bill collector regulation, pricing, utility turnoffs, consolidation and much more.
(Wiki. Consumer Protection Laws)

The Federal Trade Commission (FTC ) is a government agency in America that enforces a number of federal antitrust and consumer protection laws. One area of interest to the FTC is e-commerce and business practices on the Internet. To that end, the agency only advises consumers and businesses on such topics as e-mail scams and privacy protection, and polices the Web for violators of the Children's Online Privacy Protection Act. It appears that the FTC is most concerned with privacy and the security of data collected by e-commerce businesses.

The controversy is that the American law is lagging behind the consumer trends. More and more people are purchasing items online and there might not be adequate protection in place for the consumer.

Currently, the industry is left to police itself. This is largely undertaken by the online payment processors. This includes the credit card industry and other form of electronic payment like Paypal, Google CheckOut and Bid Pay.

In cases of suspected fraud, the funds in question are quickly deducted from the merchant’s bank account. This system appears to work for the industry. Outside of that, the Better Business Bureau has an online division that allows consumers to research and report e-tailers. Fraudulent business can also be reported to the Attorney Generals Office in which the company resides.